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SILVERCORP REPORTS ADJUSTED EARNINGS OF $52.4 MILLION, $0.30 PER SHARE, AND CASH FLOW FROM OPERATIONS OF $107.4 MILLION FOR FISCAL 2022

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SILVERCORP REPORTS ADJUSTED EARNINGS OF $52.4 MILLION, $0.30 PER SHARE, AND CASH FLOW FROM OPERATIONS OF $107.4 MILLION FOR FISCAL 2022

 

 

 

 

 

Silvercorp Metals Inc. (TSX: SVM) (NYSE American: SVM) reported its financial and operating results for the fourth quarter and twelve months ended March 31, 2022. All amounts are expressed in US Dollars, and figures may not add due to rounding.

 

FISCAL YEAR 2022 HIGHLIGHTS

  • Mined 996,280 tonnes of ore and milled 1,002,335 tonnes of ore, up 3% and 4% compared to the prior year.
  • Sold approximately 6.3 million ounces of silver, 3,400 ounces of gold, 63.6 million pounds of lead, and 26.8 million pounds of zinc, representing decreases of 1%, 28%, 5% and 4% in silver, gold, lead and zinc sold, compared to the prior year. Gold sales in the prior year included one-time sales of 1,200 ounces from the remaining concentrate inventory produced at the BYP mine before it was placed on care and maintenance in 2014.
  • Revenue of $217.9 million, up 13% compared to $192.1 million in the prior year.
  • Net income attributable to equity holders of $30.6 million, or $0.17 per share, compared to $46.4 million, or $0.27 per share in the prior year.
  • Adjusted earnings attributable to equity holders of $52.4 million, or $0.30 per share, compared to $49.8 million, or $0.28 per share in the prior year. The adjustments were made to remove impacts from non-recurring items, share-based compensation, foreign exchange gain/loss, impairment adjustments and reversals, gain/loss on equity investments and the share of associates’ operating results.
  • Cash flow from operations of $107.4 million, up 25% or $21.5 million compared to $85.9 million in the prior year.
  • Cash cost per ounce of silver, net of by-product credits, of negative $1.29 compared to negative $1.80 in the prior year.
  • All-in sustaining cost per ounce of silver, net of by-product credits, of $8.77, compared to $7.49 in the prior year.
  • Paid $4.4 million of dividends to the Company’s shareholders.
  • Acquired the Kuanping silver-lead-zinc-gold project in China for $13.1 million.
  • Strong balance sheet with $212.9 million in cash and cash equivalents and short-term investments, up $13.8 million or 7% compared to $199.1 million as at March 31, 2021. This does not include the investments in associates and equity investment in other companies, having a total market value of $164.3 million as at March 31, 2022 ($212.1 million as at March 31, 2021).

 

HIGHLIGHTS FOR Q4 FISCAL 2022

  • Mined 180,505 tonnes of ore and milled 182,670 tonnes of ore, up 11% and 1%, respectively, compared to the prior year quarter.
  • Sold approximately 1.2 million ounces of silver, 500 ounces of gold, 12.3 million pounds of lead, and 4.3 million pounds of zinc, up 11% and 13%, respectively, in silver and lead sold compared to the prior year quarter, and down 29% and 5%, respectively, in gold and zinc sold compared to the prior year quarter.
  • Revenue of $41.6 million, up 16% or $5.9 million compared to $35.7 million in the prior year quarter.
  • Net income attributable to equity holders of $4.0 million, or $0.02 per share, compared to $7.0 million, or $0.04 per share, in the prior year quarter.
  • Adjusted earnings attributable to equity holders of $9.5 million, or $0.05 per share, compared to $11.0 million, or $0.06 per share, in the prior year quarter.
  • Cash flow from operations of $11.4 million, up 411% or $9.2 million compared to $2.2 million in the prior year quarter.
  • Cash cost per ounces of silver, net of by-product credits, of negative $0.54 compared to negative $0.39 in the prior year quarter.
  • All-in sustaining cost per ounce of silver, net of by-product credits, of $12.60, compared to $12.55 in the prior year quarter.

 

CONSOLIDATED FINANCIAL RESULTS

 

Three months ended March 31, Year ended March 31,
2022 2021 Changes 2022 2021 Changes
Financial
Revenue (in thousands of $)  $       41,590 $    35,732 16% $    217,923 $    192,105 13%
Mine operating earnings (in thousands of $)  13,709 13,404 2% 84,301 84,162 0%
Net income attributable to equity holders 3,966 7,021 -44% 30,634 46,376 -34%
 Earnings per share – basic ($/share) 0.02 0.04 -50% 0.17 0.27 -37%
Adjusted earnings attributable to equity holders 9,496 10,960 -13% 52,427 49,798 5%
Adjusted earning per share – basic ($/share) 0.05 0.06 -17% 0.30 0.28 7%
Net cash generated from operating activities (in thousands of $)  11,406 2,231 411% 107,378 85,912 25%
Capitalized expenditures (in thousands of $)  9,831 6,996 41% 53,991 45,556 19%
Cash and cash equivalents and short-term investments (in thousands of $)  212,925 199,092 7% 212,925 199,092 7%
Working capital (in thousands of $)  186,270 184,014 1% 186,270 184,014 1%
Metals sold
 Silver (in thousands of ounces)  1,173 1,056 11% 6,265 6,315 -1%
 Gold (in thousands of ounces)  0.5 0.7 -29% 3.4 4.7 -28%
 Lead (in thousands of pounds)  12,279 10,876 13% 63,563 67,118 -5%
 Zinc (in thousands of pounds)  4,340 4,580 -5% 26,809 27,914 -4%
 Average Selling Price, Net of Value Added Tax and Smelter Charges 
Silver ($/ounce) 19.38 20.11 -4% 19.36 17.61 10%
Gold ($/ounce) 1,475 1,437 3% 1,495 1,430 5%
Lead ($/pound) 0.93 0.81 15% 0.90 0.75 20%
Zinc ($/pound) 1.22 0.98 24% 1.08 0.78 38%

 

  1. Fiscal 2022 Financial Results

 

Net income attributable to equity holders of the Company in Fiscal 2022 was $30.6 million or $0.17 per share, compared to $46.4 million or $0.27 per share in the year ended March 31, 2021 (“Fiscal 2021”).

 

In Fiscal 2022, the Company’s consolidated financial results were mainly impacted by i) an increase of 10%, 5%, 20% and 38%, respectively, in the realized selling prices for silver, gold, lead and zinc; offset by ii) a 1%, 28%, 5% and 4% decrease in silver, gold, lead and zinc sold; iii) a 17% increase in cash production costs per tonne, and iv) an impairment charge of $10.6 million against bond investments and a $3.5 million loss on equity investments in Fiscal 2022 while an impairment charge of $1.4 million against bond investments and a gain of $7.7 million on equity investments was recorded in Fiscal 2021.

 

Revenue in Fiscal 2022 was $217.9 million, up 13% or $25.8 million compared to $192.1 million in Fiscal 2021. The increase was mainly due to an increase of $29.9 million arising from the increase in the net realized silver, gold, lead and zinc selling prices; offset by a decrease of $7.8 million arising from the decrease in the quantities of silver, gold, lead and zinc sold. Revenues from silver, gold, and base metals were $121.3 million, $5.1 million, and $91.6 million, respectively, compared to $111.2 million, $6.7 million, and $74.2 million in Fiscal 2021. Revenue from the Ying Mining District was $176.8 million, up 12% compared to $157.3 million in Fiscal 2021. Revenue from the GC Mine was $41.2 million, up 24% compared to $33.3 million in Fiscal 2021. Gold sales in Fiscal 2021 included $1.5 million from sales of remaining gold concentrate inventory at the BYP mine before it was placed on care and maintenance in 2014.

 

Income from mine operations in Fiscal 2022 was $84.3 million, compared to $84.2 million in Fiscal 2021. Income from mine operations at the Ying Mining District was $70.0 million, down 6% compared to $74.2 million in Fiscal 2021. Income from mine operations at the GC Mine was $14.8 million, up 52% compared to $9.8 million in Fiscal 2021.

 

Cash flow provided by operating activities in Fiscal 2022 was $107.4 million, up 25% or $21.5 million, compared to $85.9 million in Fiscal 2021.

 

The Company ended the fiscal year with $212.9 million in cash, cash equivalents and short-term investments, up 7% or $13.8 million, compared to $199.1 million as at March 31, 2021.

 

Working capital as at March 31, 2022 was $186.3 million, up 1% or $2.3 million, compared to $184.0 million as at March 31, 2021.

 

  1. Q4 Fiscal 2022 Financial Results

 

Net income attributable to equity holders of the Company in Q4 Fiscal 2022 was $4.0 million or $0.2 per share, compared to $7.0 million or $0.04 per share in the three months ended March 31, 2021.

 

Compared to the prior year quarter, the Company’s consolidated financial results in Q4 Fiscal 2022 were mainly impacted by i) an increase of 3%, 15%, and 24%, respectively, in the realized selling prices for gold, lead and zinc; ii) an 11% and 13% increase in silver and lead sold; offset by iii) a 4% decrease in the realized selling price for silver;  iv) a 29% and 5% decrease in gold and zinc sold; v) an 8% increase in cash production costs per tonne; and vi) a foreign exchange loss of $3.2 million.

 

Revenue in Q4 Fiscal 2022 was $41.6 million, up 16% or $5.7 million, compared to $35.9 million in the same prior year period. The increase was mainly due to i) an increase of $3.5 million arising from more silver and lead sold; and ii) an increase of $2.4 million arising from the increase in the net realized selling price for lead and zinc. Silver, gold and base metals sales represented $22.7 million, $0.9 million, and $18.0 million, respectively, compared to silver, gold and base metals sales of $21.2 million, $1.0 million and $13.6 million, respectively, in the same prior year period.

 

Income from mine operations in Q4 Fiscal 2022 was $13.7 million, up 2% compared to $13.4 million in Q4 Fiscal 2021. Income from mine operations at the Ying Mining District was $11.9 million, compared to $11.9 million in Q4 Fiscal 2021, while GC Mine was $2.0 million, up 16% compared to $1.7 million in Q4 Fiscal 2021.

 

Cash flows provided by operating activities in Q4 Fiscal 2022 were $11.4 million, compared to $2.2 million in Q4 Fiscal 2021. Before changes in non-cash operating working capital, cash flow provided by operating activities In Q4 Fiscal 2022 was $14.0 million, compared to $11.9 million in Q4 Fiscal 2021.

 

CONSOLIDATED OPERATIONAL RESULTS

 

Three months ended March 31, Year ended March 31,
2022 2021 Changes 2022 2021 Changes
Ore Production (tonne)
Ore mined 180,505 163,072 11% 996,280 964,925 3%
Ore milled 182,670 180,674 1% 1,002,335 967,581 4%
Metal Production
 Silver (in thousands of ounces)  1,146 1,195 -4% 6,149 6,331 -3%
 Gold (in thousands of ounces)  0.5 0.3 67% 3.4 3.5 -3%
 Lead (in thousands of pounds)  11,962 12,156 -2% 64,431 68,430 -6%
 Zinc (in thousands of pounds)  4,101 4,672 -12% 26,812 28,011 -4%
Cash Costs
Cash cost per ounce of silver, net of by-product credits ($) (0.54) (0.39) -38% (1.29) (1.80) 28%
All-in sustaining cost per ounce of silver, net of by-product credits ($) 12.60 12.55 0% 8.77 7.49 17%
Cash production cost per tonne of ore processed ($) 92.78 85.70 8% 84.85 72.71 17%
All-in sustaining cost per tonne of ore processed ($) 171.56 156.36 10% 141.54 128.20 10%

 

  1. Fiscal 2022 Operational Results

 

In Fiscal 2022, on a consolidated basis, the Company mined 996,280 tonnes of ore, up 3% or 31,355 tonnes, compared to 964,925 tonnes in Fiscal 2021. Ore milled in Fiscal 2022 was 1,002,335 tonnes, up 4% or 34,754 tonnes, compared to 967,581 tonnes in Fiscal 2021.

 

In Fiscal 2022, the Company sold approximately 6.3 million ounces of silver, 3,400 ounces of gold, 63.6 million pounds of lead, and 26.8 million pounds of zinc, representing decreases of 1%, 28%, 5% and 4% respectively, in silver, gold, lead and zinc sold. Gold sold in Fiscal 2021 included one-time sales of 1,200 ounces from pre 2014 concentrate inventories at the BYP Mine.

 

Compared to Fiscal 2021, the Company’s production costs in Fiscal 2022 were mainly impacted by i) an overall 14.5% increase in mining contractors’ fee rate at the Ying Mining District;  ii) an annual average 5% appreciation of the Chinese yuan against the US dollar, resulting in higher costs presented in US dollars; iii) an average 7% increase in employees’ pay rates; iv) an annual average 12% increase in electricity prices; and iv) the contribution rate paid for employees’ social welfare funds in China returning to the normal rate from a reduced rate granted by the Chinese government in Fiscal 2021 due to Covid-19.

 

In Fiscal 2022, the consolidated cash production cost per tonne of ore processed was $84.85, up 17% compared to $72.71 in Fiscal 2021. The consolidated cash mining cost was $68.90 per tonne, up 16% compared to $59.44 in Fiscal 2021. The consolidated cash milling cost was $13.43 per tonne, up 25% compared to $10.73 in Fiscal 2021.

 

In Fiscal 2022, the consolidated all-in sustaining production cost per tonne of ore processed was $141.54, up 10% compared to $128.20 in Fiscal 2021, but within the Company’s annual guidance.

 

In Fiscal 2022, the consolidated cash cost per ounce of silver, net of by-product credits, was negative $1.29, compared to negative $1.80 in Fiscal 2021. The increase was mainly due to the increase in per tonne cash production costs, offset by an increase of $2.61 in by-product credits per ounce of silver. The consolidated all-in sustaining cost per ounce of silver, net of by-product credits, was $8.77, compared to $7.49 in Fiscal 2021.

 

In Fiscal 2022, on a consolidated basis, a total of 426,128 metres or $20.7 million worth of diamond drilling were completed (Fiscal 2021 – 254,900 metres or $8.7 million), of which approximately 276,450 metres or $7.2 million worth of underground drilling were expensed as part of mining costs (Fiscal 2021 – 196,320 metres or $5.0 million) and approximately 149,678 metres or $13.5 million worth of drilling were capitalized (Fiscal 2021 – 58,580 metres or $3.7 million). In addition, approximately 31,301 metres or $11.6 million worth of preparation tunnelling were completed and expensed as part of mining costs (Fiscal 2021 – 34,637 metres or $8.9 million), and approximately 74,062 metres or $31.0 million worth of tunnels, raises, ramps and declines were completed and capitalized (Fiscal 2021 – 85,221metres or $31.5 million).

 

  1. Q4 Fiscal 2022 Operational Results

 

In Q4 Fiscal 2022, the Company mined 180,505 tonnes of ore, up 11% or 17,433 tonnes, compared to 163,072 tonnes in Q4 Fiscal 2021. Ore milled in Q4 Fiscal 2022 was 182,670 tonnes, up 1% or 1,996 tonnes, compared to 180,674 tonnes in Q4 Fiscal 2021.

 

In Q4 Fiscal 2022, the Company sold approximately 1.2 million ounces of silver, 500 ounces of gold, 12.3 million pounds of lead, and 4.3 million pounds of zinc, representing increases of 11% and 13%, respectively, in silver and lead sold, and decreases of 29% and 5%, respectively, in gold and zinc sold, compared to approximately 1.1 million ounces of silver, 700 ounces of gold, 10.9 million pounds of lead, and 4.6 million pounds of zinc sold in Q4 Fiscal 2021.

 

In Q4 Fiscal 2022, the consolidated cash mining cost was $73.52 per tonne, compared to $70.56 in Q4 Fiscal 2021. The consolidated cash milling cost was $16.45 per tonne, compared to $12.66 per tonne in Q4 Fiscal 2021. The increase was mainly due to the same factors for the annual results.

 

Correspondingly, the consolidated cash production cost per tonne of ore processed for Q4 Fiscal 2022 was $92.78, up 8% compared to $85.70 in Q4 Fiscal 2021. The all-in sustaining production cost per tonne of ore processed was $171.56, up 10% compared to $156.36 in Q4 Fiscal 2021.

 

In Q4 Fiscal 2022, the consolidated cash cost per ounce of silver, net of by-product credits, was negative $0.54, compared to negative $0.39 in Q4 Fiscal 2021. The consolidated all-in sustaining cost per ounce of silver, net of by-product credits was $12.60 compared to $12.55 in Q4 Fiscal 2021.

 

In Q4 Fiscal 2022, on a consolidated basis, approximately 66,139 metres or $2.4 million worth of diamond drilling (Q4 Fiscal 2021– 49,459 metres or $1.6 million) were completed, of which approximately 50,384 metres or $1.2 million worth of underground drilling were expensed as part of mining costs (Q4 Fiscal 2021– 41,752 metres or $0.8 million) and approximately 15,755 metres or $1.3 million worth of drilling were capitalized (Q4 Fiscal 2021– 7,887 metres or $0.8 million). In addition, approximately 5,688 metres or $2.1 million worth of preparation tunnelling were completed and expensed as part of mining costs (Q4 Fiscal 2021– 7,015 metres or $1.5 million), and approximately 13,340 metres or $5.9 million worth of tunnels, raises, ramps and declines were completed and capitalized (Q4 Fiscal 2021– 10,803 metres or $4.7 million).

 

INDIVIDAL MINE OPERATING PERFORMANCE

 

Ying Mining District Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Year ended March 31,
 March 31, 2022   December 31, 2021  September 30, 2021  June 30, 2021  March 31, 2021 2022 2021
Ore Production (tonne)
Ore mined 130,612 200,946 206,933 142,907 112,561 681,398 650,025
Ore milled 131,731 214,982 182,173 155,407 131,725 684,293 651,402
Head grades
Silver (gram/tonne) 271 258 283 279 280 272 290
Lead (%) 3.9 3.7 4.0 4.2 3.9 3.9 4.3
Zinc (%) 0.8 0.8 0.7 0.8 0.8 0.8 0.8
Recovery rates
Silver (%) 95.2 95.1 95.4 94.7 93.7 95.1 94.2
Lead (%) 96.1 95.2 95.5 95.7 95.1 95.6 96.0
Zinc (%) 57.4 64.0 56.0 59.7 65.0 59.7 62.4
Cash Costs
Cash cost per ounce of Silver, net of by-product credits ($) 1.21 1.19 0.71 0.80 1.20 0.96 (0.39)
All-in sustaining cost per ounce of silver, net of by-product credits ($) 10.76 8.36 6.88 6.54 10.00 7.93 6.09
Cash production cost per tonne of ore processed ($) 102.49 99.24 96.59 92.79 98.13 97.76 83.01
All-in sustaining cost per tonne of ore processed ($) 172.63 143.72 141.26 138.55 155.14 147.52 132.54
Metal Production
 Silver (in thousands of ounces)  1,062 1,647 1,517 1,283 1,083 5,509 5,615
 Gold (in thousands of ounces)  0.5 1.1 0.8 1.0 0.3 3.4 3.5
 Lead (in thousands of pounds)  10,542 16,392 14,671 13,278 10,504 54,883 57,886
 Zinc (in thousands of pounds)  1,317 2,347 1,584 1,519 1,496 6,767 6,916

 

In Fiscal 2022, a total of 351,458 metres or $15.6 million worth of diamond drilling were completed (Fiscal 2021 – 208,904 metres or $6.9 million), of which approximately 216,068 metres or $5.0 million worth of underground drilling were expensed as part of mining costs (Fiscal 2021 – 150,324 metres or $3.2 million) and approximately 135,390 metres or $10.6 million worth of drilling were capitalized (Fiscal 2021 – 58,580 metres or $3.7 million). In addition, approximately 25,134 metres or $9.9 million worth of preparation tunnelling were completed and expensed as part of mining costs (Fiscal 2021 – 22,918 metres or $6.7 million), and approximately 60,311 metres or $26.7 million worth of horizontal tunnels, raises, ramps, and declines were completed and capitalized (Fiscal 2021 – 73,350 metres or $27.4 million).

 

GC Mine Q4 2022 Q3 2022 Q2 2022 Q1 2021 Q4 2021 Year ended March 31,
  March 31, 2021     December 31, 2021   September 30, 2021   June 30, 2021   March 31, 2021 2022 2021
Ore Production (tonne)
Ore mined 49,893 91,126 85,535 88,328 50,511 314,882 314,900
Ore milled 50,939 89,790 89,643 87,670 48,949 318,042 316,179
Head grades
Silver (gram/tonne) 62 78 73 80 87 75 85
Lead (%) 1.4 1.5 1.7 1.5 1.7 1.5 1.7
Zinc (%) 2.8 3.2 3.3 3.3 3.3 3.2 3.4
Recovery rates
Silver (%) 82.4 83.5 84.4 84.1 81.9 83.8 82.5
Lead (%) 88.7 89.0 89.5 89.3 89.7 89.2 89.6
Zinc (%) 89.8 89.8 89.6 89.3 88.2 89.6 88.2
Cash Costs
Cash cost per ounce of Silver, net of by-product credits ($) (16.59) (25.84) (22.51) (17.96) (12.80) (20.91) (11.48)
All-in sustaining cost per ounce of silver, net of by-product credits ($) (0.39) (9.81) (11.61) (7.98) 0.52 (8.07)
Cash production cost per tonne of ore processed ($) 67.33 56.10 55.81 52.90 58.56 56.90 51.44
All-in sustaining cost per tonne of ore processed ($) 100.13 81.50 73.76 71.67 87.69 79.56 74.09
Metal Production
 Silver (in thousands of ounces)  84 187 179 190 112 640 716
 Lead (in thousands of pounds)  1,420 2,586 2,942 2,600 1,652 9,548 10,544
 Zinc (in thousands of pounds)  2,784 5,683 5,899 5,679 3,176 20,045 21,095

 

In Fiscal 2022, a total of 66,699 metres or $2.5 million worth of diamond drilling were completed (Fiscal 2021 – 45,996 metres or $1.8 million), of which approximately 60,382 metres or $2.2 million worth of underground drilling were expensed as part of mining costs (Fiscal 2021 – 45,996 metres or $1.8 million) and approximately 6,317 metres or $0.3 million worth of drilling were capitalized (Fiscal 2021 – nil). In addition, approximately 6,167 metres or $1.7 million worth of preparation tunnelling were completed and expensed as part of mining costs (Fiscal 2021 – 11,719 metres or $2.2 million), and approximately 13,751 metres or $4.3 million worth of horizontal tunnels, raises, ramps, and declines were completed and capitalized (Fiscal 2021 – 11,871 metres or $3.9 million).

 

About Silvercorp

 

Silvercorp is a Canadian mining company producing silver, gold, lead, and zinc with a long history of profitability and growth potential. The Company’s strategy is to create shareholder value by 1) focusing on generating free cashflow from long life mines; 2) organic growth through extensive drilling for discovery; 3) equity investments in potential world class opportunities; 4) ongoing merger and acquisition efforts to unlock value; and 5) long term commitment to responsible mining and ESG. For more information, please visit our website at www.silvercorp.ca.

 

Posted May 27, 2022

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